European Commission Designates Six Tech Giants as Gatekeepers under Digital Markets Act

The #DMA, which came into force in November 2022 and has been applied since May 2023, is designed to ensure fair and competitive markets in the digital sector. It primarily targets gatekeepers, large online platforms that wield considerable influence and serve as critical intermediaries between business users and consumers.

Six Tech Giants Designated as first Gatekeepers

The commission's decision to designate these six companies as gatekeepers follows a 45-day review process initiated after Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft, and Samsung voluntarily notified their potential status as gatekeepers. In total, 22 core platform services offered by these gatekeepers have been identified.

Thierry Breton, Commissioner for Internal Market, emphasized the DMA's potential to foster choice for consumers and create opportunities for smaller tech companies, thanks to interoperability, sideloading, real-time data portability, and fairness.

Commissioner Didier Reynders underscored the DMA's role in leveling the playing field for all companies operating in the European digital market, promoting contestability and openness.

Key Findings and Investigations:

1. Microsoft's Bing, Edge, and Microsoft Advertising, along with Apple's iMessage, are under scrutiny in separate market investigations to assess whether they genuinely qualify as gateways, despite meeting the prescribed criteria. These investigations aim to ascertain whether the companies' arguments hold water.
2. A separate investigation has been launched to evaluate whether Apple's iPadOS should be designated as a gatekeeper, even though it didn't initially meet the established thresholds.
3. On the other hand, the commission determined that Gmail, Outlook.com, and Samsung Internet Browser meet the DMA criteria but accepted sufficiently justified arguments from Alphabet, Microsoft, and Samsung that these services do not qualify as gateways. As a result, these services have not been designated as core platform services.

https://twitter.com/ThierryBreton/status/1699354391101260102

What's Next for Designated Gatekeepers: The six designated gatekeepers must now ensure full compliance with the obligations set forth by the DMA for each of their designated core platform services within six months. Some obligations will take effect immediately upon designation, including the requirement to inform the Commission of any intended mergers or acquisitions. The onus is on the designated companies to demonstrate effective compliance.

The Commission will actively monitor the implementation of these obligations and compliance. In case of non-compliance, the Commission has the authority to impose fines of up to 10% of the company's worldwide turnover, which can escalate to 20% in case of repeat violations. For systematic infringements, additional remedies may be applied, including the divestiture of business segments or restrictions on acquisitions.

But what exactly defines a gatekeeper under the DMA?

The Act outlines specific criteria that must be met for a company to be designated as a gatekeeper. These include having a strong economic position across multiple EU countries, significant impact on the internal market, and a robust intermediation position linking a substantial user base to numerous businesses. Moreover, gatekeepers must have or be on the verge of establishing an entrenched and enduring market position over the last three financial years.

The DMA brings with it a host of benefits for various stakeholders:

1. Fairer Business Environment: Business users relying on gatekeepers to offer services in the single market will experience a fairer and more equitable business environment.
2. Opportunities for Innovators: Technology start-ups and innovators will have enhanced opportunities to compete and innovate within the online platform ecosystem without being bound by unfair terms and conditions.
3. Consumer Choice: Consumers will gain access to more and better services, increased options to switch providers, direct access to services, and fairer pricing.

For gatekeepers, the DMA imposes a set of obligations, comprising "do's" and "don'ts" they must adhere to in their daily operations. Here are some examples:

Do's:

• Allow third parties to interoperate with their services in specific situations.
• Enable business users to access the data generated on their platforms.
• Provide advertising companies on their platform with tools for independent verification of their advertisements.
• Permit business users to promote their offers and conclude contracts outside the gatekeeper's platform.

Don'ts:

• Show favoritism to their services or products in rankings over similar offerings from third parties on their platform.
• Prohibit consumers from engaging with businesses outside their platforms.
• Prevent users from uninstalling pre-installed software or apps.
• Track end users outside their core platform service for targeted advertising without effective consent.

Background: The DMA seeks to prevent gatekeepers from imposing unfair conditions on businesses and end-users while ensuring the openness of crucial digital services. It is part of a broader EU effort to regulate online platforms acting as digital gatekeepers to the single EU market.